WEBVTT - Matt Levine On What to Watch In Twitter vs. Elon Musk 0:00:10.560 --> 0:00:13.920 Hello, and welcome to another episode of the Add Thoughts Podcast. 0:00:14.000 --> 0:00:17.319 I'm Tracy Alloway and I'm Joe Wish. Joe, do we 0:00:17.880 --> 0:00:20.560 do we want Elon Musk to buy Twitter? At this point, 0:00:20.640 --> 0:00:24.639 I can't decide, Like I feel uncomfortable with the idea 0:00:24.680 --> 0:00:29.480 of him owning Twitter, given um, you know, the way 0:00:29.520 --> 0:00:32.760 he is, I guess, But then secondly, I really like 0:00:33.479 --> 0:00:36.400 I also want him to feel the full force of 0:00:36.479 --> 0:00:39.680 contract law and not get away with trashing the US 0:00:39.760 --> 0:00:44.720 legal system. Okay, my stance on this is I really 0:00:44.840 --> 0:00:47.720 like the way Twitter is currently run because it doesn't 0:00:47.720 --> 0:00:50.120 seem like it's a great business, but it has these 0:00:50.120 --> 0:00:52.640 positive externalities, like I get a lot of value out 0:00:52.640 --> 0:00:55.120 of it as a journalist, and it hasn't changed action. 0:00:55.160 --> 0:00:57.840 They haven't really ruined the product. So I like it 0:00:57.880 --> 0:01:01.160 the way it is, and I wanted to never evolve 0:01:01.360 --> 0:01:05.000 or improve or anything. And I'm worried, and I'm worried 0:01:05.000 --> 0:01:07.280 that if it's ever run like a really good business 0:01:07.720 --> 0:01:10.720 that it will be worse for me. And so I don't, 0:01:10.800 --> 0:01:13.080 you know, I don't care if it's Elon or anyone else. 0:01:13.120 --> 0:01:15.280 I just don't want anyone running it who actually like 0:01:15.480 --> 0:01:19.240 has some good ideas about how to fix it. Okay, Well, 0:01:20.000 --> 0:01:22.200 on that note, and without further ado, we are going 0:01:22.240 --> 0:01:25.720 to be talking about all of the thorny questions um 0:01:25.720 --> 0:01:29.600 thrown up by the Elon Musk Twitter saga, which is 0:01:29.640 --> 0:01:32.800 now devolved into a court battle. You know, it started 0:01:32.840 --> 0:01:37.399 stupidly with um D versus thirteen G stuff, and it 0:01:37.440 --> 0:01:41.640 seems like inevitably is going to end stupidly and in tears, 0:01:41.760 --> 0:01:44.800 in some sort of drawn out legal drama. So who 0:01:44.800 --> 0:01:47.120 do we call for legal drama? Who knows about Twitter 0:01:47.160 --> 0:01:49.360 and Elon? I don't know. Do we know anyone? Yeah? 0:01:49.600 --> 0:01:52.320 We do. Uh. Matt Levin is with us to talk 0:01:52.360 --> 0:01:55.120 about everything that's going on. Matt, thank you so much 0:01:55.160 --> 0:01:58.720 for coming back on all thoughts. Hey guys, it's it's 0:01:58.840 --> 0:02:03.920 terrible to be here. That's fair. That's fair. Um. Okay, 0:02:04.040 --> 0:02:07.200 let's start with the first question. Elon Musk backing out 0:02:07.200 --> 0:02:10.080 of the Twitter deal. I think Twitter stock is down 0:02:10.120 --> 0:02:13.560 something like since the deal was announced. Um, it was 0:02:13.600 --> 0:02:16.160 a forty four billion dollar offer back then it is 0:02:16.200 --> 0:02:19.840 not now? Is this just a tactic by Elon to 0:02:20.360 --> 0:02:23.639 try to get a lower price? I have no idea, man, 0:02:23.680 --> 0:02:26.240 I write about this every day and I have no 0:02:26.919 --> 0:02:31.040 visibility into the way his mind works. I mean, like 0:02:31.120 --> 0:02:33.400 a first level analysis here is that he's like an 0:02:33.400 --> 0:02:37.800 extremely whimsical guy. He whimsically wanted to buy Twitter, he 0:02:37.919 --> 0:02:40.919 got bored with it, and now he wants to walk away. 0:02:40.960 --> 0:02:44.120 That's my best guess about what's going on. And so 0:02:45.000 --> 0:02:47.400 he is not really looking to re cut a deal 0:02:47.440 --> 0:02:49.399 at a lower price. He's really looking to get out 0:02:49.400 --> 0:02:51.600 of it. Um, that's it. I mean, it is clear 0:02:51.680 --> 0:02:54.200 that one thing that changed between the time that he 0:02:54.320 --> 0:02:56.360 enthusiastically wanted to buy Twitter and the time that he 0:02:56.400 --> 0:02:58.480 wanted to get out of buying Twitter is that the 0:02:58.520 --> 0:03:02.160 market went down. You know, Twitter is a less valuable company, 0:03:02.320 --> 0:03:04.760 but also kind of more to the point, Tesla is 0:03:04.800 --> 0:03:06.840 a much less valuable company, and he was sort of, 0:03:06.880 --> 0:03:08.680 you know, going to pay for this out of like 0:03:08.720 --> 0:03:10.960 pocket change from selling a few Tesla shares, And now 0:03:11.000 --> 0:03:14.160 that is a somewhat more expensive proposition for him. And 0:03:14.240 --> 0:03:16.839 so it is like clearly the case that like economically 0:03:16.880 --> 0:03:18.600 this deal is worse for him, and if he recut 0:03:18.639 --> 0:03:21.600 the deal at a lower price, it would be more acceptable. 0:03:21.919 --> 0:03:24.080 But I don't know, I mean, like he's just going 0:03:24.160 --> 0:03:26.960 around trashing Twitter all the time, and it seems like 0:03:28.360 --> 0:03:30.400 that would not be a great strategy if you then 0:03:30.480 --> 0:03:32.680 wanted to close the deal, even at a lower price. 0:03:32.919 --> 0:03:36.120 All right, I we pride ourselves at odd Lots for 0:03:36.200 --> 0:03:39.600 asking the stupid questions that everyone else is afraid to ask. 0:03:39.800 --> 0:03:42.520 So I'm going to ask the big question that listeners 0:03:42.520 --> 0:03:47.000 will really appreciate. Uh. Someone finally saying out loud, what 0:03:47.280 --> 0:03:50.040 is a chancery? Why do they tell at the Delaware 0:03:50.120 --> 0:03:53.120 chancery courts? What is that word? Even me? God, I 0:03:53.160 --> 0:03:56.760 feel like I'm going to get this wrong. Um, so okay, 0:03:56.960 --> 0:03:59.760 So like here's here's like I went to I went 0:03:59.800 --> 0:04:01.400 to the school a long time ago. I'm gonna try 0:04:01.440 --> 0:04:03.720 to remember. I'm gonna do my best to remember. But now, 0:04:03.760 --> 0:04:06.920 so like in like old school, like English common law, 0:04:07.280 --> 0:04:10.600 and like you know, there were two things. There was 0:04:10.920 --> 0:04:13.040 a court of law and a court of equity, and 0:04:13.120 --> 0:04:15.680 like law was you know, this is not quite right, 0:04:15.760 --> 0:04:18.920 but sort of like intuitively law was like written sort 0:04:18.920 --> 0:04:21.760 of like clear law, and then equity was like wow, 0:04:21.800 --> 0:04:24.599 we do it's fair, and the world sort of evolved 0:04:24.600 --> 0:04:27.479 from then that distinction. You know, like there are not 0:04:27.640 --> 0:04:30.359 different courts like that in most of America, and the 0:04:30.400 --> 0:04:32.440 distinction between law and equity as a sort of like 0:04:32.560 --> 0:04:34.440 legal matter is like a little blurrier that it used 0:04:34.480 --> 0:04:37.280 to be, but people still talk about it. In Delaware, 0:04:37.600 --> 0:04:40.200 there remains a court of equity, which is called the 0:04:40.240 --> 0:04:43.320 Court of Chancery, and they do They have sort of 0:04:43.360 --> 0:04:47.000 a narrow set of jobs, but the main one is 0:04:47.040 --> 0:04:49.760 they do corporate law. So like all like murder, so 0:04:49.880 --> 0:04:53.719 every not every nineties something percent of like big US 0:04:53.800 --> 0:04:57.599 corporations are incorporated in Delaware and are subject to Delaware law, 0:04:57.839 --> 0:05:00.599 and most murder agreements are subject to Delaware. And so 0:05:00.680 --> 0:05:03.560 when there's a big dispute about a merger about corporate governance, 0:05:03.560 --> 0:05:06.000 generally it's usually in Delaware court, and it's in the 0:05:06.000 --> 0:05:08.520 Delaware Court of Chancery, which has like a handful of 0:05:08.600 --> 0:05:12.039 judges who are experts in business law. They also do 0:05:12.080 --> 0:05:13.640 some other stuff. I think they like the family Court 0:05:13.720 --> 0:05:16.000 or something. They have like some weird sort of set 0:05:16.000 --> 0:05:17.839 of cases. But like the one that you hear about 0:05:17.920 --> 0:05:21.080 is they do all the merger cases class action lawsuits 0:05:21.160 --> 0:05:26.080 and the judges no no class action well depends uh 0:05:26.200 --> 0:05:29.120 not securities class actions. They do like corporate law, Like 0:05:29.880 --> 0:05:31.479 there's a there's a kind of class actional they do, 0:05:31.480 --> 0:05:34.120 but like not not securities class actions, but they are 0:05:34.240 --> 0:05:36.640 you know, there's like a handful of judges and they're 0:05:36.640 --> 0:05:38.919 called chancellors. Actually they're called vice chancellor. Is one of 0:05:38.920 --> 0:05:43.320 them is the chancellor and they sort of develop the 0:05:43.360 --> 0:05:45.560 doctrine of of like when mergers have to close and 0:05:45.560 --> 0:05:49.240 stuff like that. So, how hard is it in this 0:05:49.320 --> 0:05:52.400 court to argue that there has been a material change 0:05:52.480 --> 0:05:56.159 or misrepresentation that should let you, in theory, get out 0:05:56.160 --> 0:05:59.599 of a deal, Like, are there any historical examples of that? Actually? 0:05:59.720 --> 0:06:02.359 Six eating So for so Musk is are you a 0:06:02.360 --> 0:06:05.040 couple of things? I mean, first of all, we're talking 0:06:05.040 --> 0:06:08.560 about this on Wednesday, July. Twitter has just sued Musk 0:06:08.600 --> 0:06:10.680 to close the deal. Musk has not filed any sort 0:06:10.720 --> 0:06:12.719 of reply in courts, So Musk is not really We 0:06:12.720 --> 0:06:15.400 probably should have mentioned so that in the intro that yes, 0:06:15.560 --> 0:06:18.320 last night, less than twenty four hours ago before recording this, 0:06:19.279 --> 0:06:23.000 Twitter did file this lawsuit against Musk forcing attempting to 0:06:23.040 --> 0:06:25.559 force him to close the deal. Yeah, so we haven't 0:06:25.560 --> 0:06:28.080 seen anything from from from Musk in courts, so we 0:06:28.120 --> 0:06:30.039 don't know exactly what his arguments are. But what we 0:06:30.080 --> 0:06:32.840 do have is his letter to Twitter terminating the deal, 0:06:33.279 --> 0:06:35.800 or I guess you should say, purporting to terminate the deal, 0:06:36.040 --> 0:06:37.840 and that lists his reasons why he thinks he can 0:06:37.839 --> 0:06:39.760 get out of the deal. One of them, as you say, 0:06:39.839 --> 0:06:41.760 is that there might have been or there might be 0:06:41.839 --> 0:06:45.000 a material adverse effect on Twitter. Famously, there's sort of 0:06:45.040 --> 0:06:48.520 been one Delaware court decision ever finding a material adverse effect, 0:06:48.839 --> 0:06:51.479 and there's sort of a rule of thumb that the 0:06:51.520 --> 0:06:55.679 Delaware chancellors used that like a sustained drop an income 0:06:55.720 --> 0:07:01.000 of like is a material adverse effect. Basically, the view 0:07:01.040 --> 0:07:03.480 is that it's a very high standard. And when one 0:07:03.520 --> 0:07:05.680 aspect of it is like when you say material adverse effect, 0:07:06.520 --> 0:07:08.760 there are a lot of things that don't count. So 0:07:08.839 --> 0:07:13.120 like the pandemic is carved out from m as the 0:07:13.200 --> 0:07:16.240 stock market going down is carved out. Things having to 0:07:16.280 --> 0:07:18.200 do with the deal are carved out. So like the 0:07:18.240 --> 0:07:21.440 fact that Elon Musk was going to buy Twitter probably 0:07:21.480 --> 0:07:24.640 drove away some employees and advertisers, but that can't count 0:07:24.680 --> 0:07:26.560 as an m A. The only thing that can count 0:07:26.640 --> 0:07:30.600 is basically, like the company itself blows itself up, and 0:07:30.680 --> 0:07:32.840 that's like an extraordinary high standard, and there's just there's 0:07:32.880 --> 0:07:36.200 just like not not a whisper of anything like that here. 0:07:36.360 --> 0:07:40.360 Now separately, he's arguing that like they have too many bots, 0:07:40.800 --> 0:07:44.280 and that you know, if they have too many bots, 0:07:44.520 --> 0:07:46.119 he can get out of the deal if that would 0:07:46.160 --> 0:07:50.600 cause an m A. Now, if you sort of take 0:07:50.640 --> 0:07:53.160 the maximal reading of Elon Musk's argument, you say, well, 0:07:53.200 --> 0:07:56.400 you know, Twitter has been lying for years to advertisers 0:07:56.400 --> 0:07:58.760 in the public. It has been selling stock and selling 0:07:58.800 --> 0:08:02.119 ads by saying that only five percent of its active 0:08:02.160 --> 0:08:05.000 users or bots, and really it's fifty and Twitter has 0:08:05.040 --> 0:08:06.920 known that for years and has been lying about it 0:08:06.960 --> 0:08:10.320 to perpetrate a massive fraud. I think if like proof 0:08:10.320 --> 0:08:13.480 of that came out tomorrow, then probably Twitter would lose 0:08:13.520 --> 0:08:15.280 a lot of business, and so it would like lose 0:08:15.320 --> 0:08:17.080 a lot of income and probably would getten a lot 0:08:17.120 --> 0:08:19.320 of trouble, which would also potentially be an m A. 0:08:19.840 --> 0:08:22.240 But when I say, there's no evidence of that, like, 0:08:22.280 --> 0:08:25.240 it's just it's like no one ever thought it until 0:08:25.280 --> 0:08:28.120 Ian must started pretending to think it. You know, there's 0:08:28.160 --> 0:08:30.160 not no evidence like that. It's just not in the 0:08:30.200 --> 0:08:33.360 realm of possibility. So that's probably not gonna work. The 0:08:33.440 --> 0:08:35.160 other thing that he's doing is he's arguing that Twitter 0:08:35.200 --> 0:08:37.680 has breached some of its covenants. It is like, promised 0:08:37.679 --> 0:08:39.480 to do things between the signing of the merger and 0:08:39.480 --> 0:08:42.160 the closing of the merger, and then it hasn't done them. Um. 0:08:42.160 --> 0:08:43.960 And the main one is that he's arguing that it 0:08:44.000 --> 0:08:47.199 hasn't given him all the information he wants about the bots, 0:08:47.440 --> 0:08:50.560 which is a slightly lower standard to get out of 0:08:50.559 --> 0:08:53.280 the deal for not providing the information. But it's still 0:08:53.520 --> 0:08:57.720 still feels hard to imagine it all work. The box 0:08:57.760 --> 0:08:59.440 thing is funny, and you wrote this in one of 0:08:59.480 --> 0:09:02.920 your call Okay, who knows exactly how many bots there 0:09:02.960 --> 0:09:05.400 are at Twitter? There's probably a lot, and you know, 0:09:05.480 --> 0:09:08.120 he must himself probably every one of his replies gets 0:09:08.120 --> 0:09:10.560 a thousand bots, which is why it maybe top of 0:09:10.640 --> 0:09:12.719 mind for him. But it's hard to see it like 0:09:12.760 --> 0:09:16.600 being material in part because, like, okay, advertisers by ads, 0:09:16.760 --> 0:09:20.600 and then they can see very directly, I think, how 0:09:20.679 --> 0:09:23.199 many you know, for every thousand dollars of ad spend, 0:09:23.240 --> 0:09:25.840 how much they get in revenue, and so in theory, 0:09:26.000 --> 0:09:28.360 like it's hard to see how that would be a 0:09:28.400 --> 0:09:30.520 major even if by some measure, there are way more 0:09:30.559 --> 0:09:35.040 bots on Twitter than its previously acknowledged. You still there 0:09:35.080 --> 0:09:37.040 is that r o I. It's like either you're getting 0:09:37.080 --> 0:09:39.880 revenue from the ads or not. And it's hard to 0:09:39.920 --> 0:09:42.360 see how like even if there was a way off 0:09:42.400 --> 0:09:44.200 on the bots number, how that would like really be 0:09:44.320 --> 0:09:47.360 changing the business much at this point. Yeah, basically the 0:09:47.400 --> 0:09:49.800 earthier I don't I don't know, Like I think like that, 0:09:50.000 --> 0:09:51.400 you know, to the extent there's some amount of like 0:09:51.440 --> 0:09:53.600 brand advertising on Twitter where like you're sort of not 0:09:53.640 --> 0:09:56.400 getting a direct like clicker eye than then. But but no, 0:09:56.520 --> 0:09:58.480 I agree with you, like, like the whole thing is absurd, 0:09:58.520 --> 0:10:01.240 Like there's no like it's just a fantasy that Ellen 0:10:01.280 --> 0:10:03.079 has concocted to try to get out of the deal. 0:10:03.240 --> 0:10:21.719 There's nothing, there's no real argument there. Can you talk 0:10:21.760 --> 0:10:24.520 to us a bit about the Twitter lawsuit because like 0:10:24.640 --> 0:10:28.320 a it's funny and it references a bunch of Musk tweets, 0:10:28.360 --> 0:10:31.880 but be like, my understanding is that there's a specific 0:10:31.920 --> 0:10:36.240 performance clause which gives Twitter the right to sue Musk 0:10:36.400 --> 0:10:38.880 to complete the deal as long as he has the 0:10:38.960 --> 0:10:42.040 debt financing. So talked to us about like what's possible 0:10:42.120 --> 0:10:45.760 under that, and could Musk like just try to scare 0:10:45.960 --> 0:10:48.920 away the banks or something at this point, like would 0:10:48.960 --> 0:10:51.040 that be a viable out for him if he said, like, oh, 0:10:51.080 --> 0:10:53.840 actually I don't have the debt financing lined up. The 0:10:53.880 --> 0:10:58.079 agreement says that if Twitter sues Musk for damages for 0:10:58.120 --> 0:11:00.679 preaching the agreement, they can only get a billion dollars, 0:11:00.840 --> 0:11:03.040 which is also the breakup fee that he agreed to 0:11:03.040 --> 0:11:05.679 pay if he walks away. So that's just not very 0:11:05.760 --> 0:11:10.040 much money, you know, in the context of a billion. Yeah, 0:11:10.040 --> 0:11:11.760 like it's a forty four billion dollar deal, and like 0:11:11.800 --> 0:11:13.960 I think if he walks away, like, you know, no 0:11:14.000 --> 0:11:15.760 one really knows, but the stock probably, you know, the 0:11:15.840 --> 0:11:18.480 company probably is worth you know, twenty billion ish, and 0:11:18.559 --> 0:11:21.360 so you're talking about like twenty plus billion dollars of damages. 0:11:21.600 --> 0:11:24.000 So the billion dollars of damages is just it's just 0:11:24.080 --> 0:11:26.800 not really compensation with Twitter. But as you say, the 0:11:26.840 --> 0:11:29.959 agreement says they can get specific performance. They can force 0:11:30.040 --> 0:11:33.400 Musk to close the deal. And there is some recent 0:11:33.480 --> 0:11:36.680 history of Delaware courts saying okay, you have to close 0:11:36.720 --> 0:11:40.960 the deal and forcing unwilling buyers to close mergers because 0:11:40.960 --> 0:11:42.800 they have no excuse for getting out of them. So 0:11:42.880 --> 0:11:45.600 that's very much a live possibility. Now, as you say, 0:11:46.040 --> 0:11:48.160 there are some conditions that you know, one is that 0:11:48.200 --> 0:11:51.200 like Twitter can't have violated its agreements, right, so maybe 0:11:51.280 --> 0:11:53.280 Must can wiggle out of this by saying it didn't 0:11:53.280 --> 0:11:55.640 give him enough information about the box. But the other 0:11:55.679 --> 0:11:57.960 one is that even if Twitter has done nothing wrong, 0:11:58.320 --> 0:12:01.439 Musk only has to close the deal if the debt 0:12:01.480 --> 0:12:04.320 financing is in place. So he has a thirteen billion 0:12:04.360 --> 0:12:07.000 dollar commitment letter from his banks saying that they will 0:12:07.040 --> 0:12:10.360 fund you know, thirteen billion dollars of Twitter debt to 0:12:10.360 --> 0:12:13.400 close the deal, and if the banks disappear then then 0:12:13.440 --> 0:12:16.439 he doesn't have to close. Can he blow that up? 0:12:16.480 --> 0:12:19.400 I mean I think that like, it's not it's committed financing, 0:12:19.480 --> 0:12:23.880 Like they have contractual obligations to him to fund. They 0:12:23.920 --> 0:12:27.760 don't have contractual obligations to Twitter. But there is precedent 0:12:28.240 --> 0:12:33.520 in Delaware for buyers, you know, having the same thought 0:12:33.559 --> 0:12:35.160 process and saying I'm gonna blow up my debts so 0:12:35.200 --> 0:12:37.760 I don't have to close the deal and blowing up 0:12:37.800 --> 0:12:40.199 their debt and the court saying the court of chancery, 0:12:40.200 --> 0:12:42.560 which is you know, a court of equity saying no, no, no, 0:12:43.280 --> 0:12:45.920 if you're blowing up your dat you know, intentionally, then 0:12:46.280 --> 0:12:47.679 we're not going to give you credit for that. We're 0:12:47.679 --> 0:12:50.160 gonna make you close even though your debt financing isn't 0:12:50.160 --> 0:12:52.800 in place. So deals with like the same language as 0:12:53.160 --> 0:12:56.360 as as what Mask has here, the court said, you 0:12:56.400 --> 0:12:58.760 know you're blowing up your debt doesn't doesn't work well. 0:12:58.800 --> 0:13:00.520 The other thing I'd say is like, you know, we're 0:13:00.600 --> 0:13:04.040 kind of early, honestly, like he has said he's terminating 0:13:04.040 --> 0:13:06.920 the deal, but like, you know, they haven't even had 0:13:06.920 --> 0:13:09.200 a share older vote, Like there's there's a lot like 0:13:09.240 --> 0:13:11.440 the debt financing was kind of early in in like 0:13:11.640 --> 0:13:13.280 getting done. It wasn't like they were like going out 0:13:13.280 --> 0:13:15.960 to market the debt. So one thing that Twitter is 0:13:15.960 --> 0:13:18.640 looking for here when they sue is they want to 0:13:18.760 --> 0:13:21.920 judge too, Like they can't have him. They can't order 0:13:22.040 --> 0:13:23.640 Musk to close the deal because it's just like they 0:13:23.679 --> 0:13:25.160 haven't had a share old vote yet. You know, it's 0:13:25.160 --> 0:13:27.079 not it's not ready to close yet. But what they 0:13:27.080 --> 0:13:30.240 can do is order Musk to try to get the 0:13:30.240 --> 0:13:32.840 debt financing. And if a judge says you have to 0:13:32.880 --> 0:13:35.040 cooperate with getting the debt financing, and if you don't, 0:13:35.120 --> 0:13:39.000 you'll be in contempt. Then it's somewhat harder for Elon, 0:13:39.120 --> 0:13:41.440 for even Elon Musk to blow up the debt financing. 0:13:41.600 --> 0:13:44.480 But also it's really hard for the banks to let him, 0:13:44.640 --> 0:13:47.439 Like if you're Morgan Stanley and it was like Elon's 0:13:47.480 --> 0:13:49.760 lead bank and a court says Elon, you have to 0:13:49.760 --> 0:13:53.160 cooperate with the financing. You don't want to go to 0:13:53.240 --> 0:13:56.920 court to be like, oh no, independently, we couldn't get 0:13:56.960 --> 0:13:59.439 this financing done. Also, I mean to be clear, like 0:13:59.480 --> 0:14:02.280 their finance thing, it's committed financing, like this is not 0:14:02.280 --> 0:14:03.480 not like a letter of being like that we'll do 0:14:03.559 --> 0:14:05.640 our best right like they've they've committed to fund a 0:14:05.679 --> 0:14:08.080 thirteen billion dollar financing, like there are conditions to it, 0:14:08.120 --> 0:14:10.760 but they're fairly minor, and like for the bank to 0:14:10.800 --> 0:14:13.280 walk away is going to be challenging. So just on 0:14:13.320 --> 0:14:17.160 this topic of like forcing the deal to go through, 0:14:17.640 --> 0:14:21.640 So I mean, part of me thinks, obviously you shouldn't 0:14:21.680 --> 0:14:24.120 be able to frivolously say that you are going to 0:14:24.160 --> 0:14:26.640 buy a company and then just like walk away from 0:14:26.680 --> 0:14:29.880 it and not go through with it. For not exactly 0:14:29.920 --> 0:14:32.400 great reasons. It's not good for markets and it's not 0:14:32.440 --> 0:14:35.520 good for society, so there should obviously be some punishment 0:14:35.560 --> 0:14:38.960 for that. But part of me is also like, is 0:14:39.000 --> 0:14:43.080 it weird to force people to do deals? Like what 0:14:43.320 --> 0:14:46.840 is the benefit of that forcing a company into the 0:14:46.920 --> 0:14:52.080 hands of an unwilling buyer? Like that also seems questionable, 0:14:52.720 --> 0:14:54.360 certainly when it comes to Twitter, which a lot of 0:14:54.360 --> 0:14:58.840 people would argue is like a platform for societal discourse, 0:14:58.960 --> 0:15:00.680 is a nice way of putting it, Like, how should 0:15:00.720 --> 0:15:04.760 we think about those two things? Yeah, it's really weird, 0:15:04.800 --> 0:15:06.520 so so look so like if you look back at 0:15:06.640 --> 0:15:09.880 the cases where this has happened occasionally, like there's a 0:15:09.920 --> 0:15:12.720 public company trying to buy another public company and there'll 0:15:12.720 --> 0:15:16.320 be an argument on specific performance, and the court will say, 0:15:16.760 --> 0:15:18.920 we'll sort of think about questions like how hard will 0:15:18.960 --> 0:15:20.920 it be to integrate these companies, which is like a 0:15:20.920 --> 0:15:22.560 weird thing for the court to think about, right, But 0:15:22.600 --> 0:15:25.960 if you're an unwilling public company buyer, you know, being 0:15:25.960 --> 0:15:29.320 forced to buy another company, you might care like will 0:15:29.360 --> 0:15:32.480 that be a disaster for the business? Right, But most 0:15:32.480 --> 0:15:36.560 of these cases are private equity firms, and there there's 0:15:36.640 --> 0:15:40.640 kind of like there's no integration. You know, there was 0:15:40.680 --> 0:15:43.040 a shareholder of a company, and now there's gonna be 0:15:43.040 --> 0:15:45.760 another shareholder of the company, and the shareholder will get 0:15:45.760 --> 0:15:48.640 the money from the company, but like nothing else needs 0:15:48.680 --> 0:15:51.680 to change. And so in some ways, it's actually like 0:15:51.720 --> 0:15:53.920 fairly easy to order a private equity firm to buy 0:15:53.920 --> 0:15:55.960 a company that doesn't want because it's just like an 0:15:55.960 --> 0:15:58.520 economic transaction, right, the private equity firm is going to 0:15:58.560 --> 0:16:01.320 try to maximize value it, you know, wished it would 0:16:01.320 --> 0:16:03.480 have paid a lower price. It's like still weird. It's 0:16:03.480 --> 0:16:05.400 weird to make someone buy a company they don't want, 0:16:05.440 --> 0:16:07.520 but like you're only making them buy it. You're only 0:16:07.520 --> 0:16:09.200 making them put up the money and then be like 0:16:09.240 --> 0:16:11.400 the you know, economic owner. You're not making them run 0:16:11.400 --> 0:16:14.640 at day to day Here, it's different, right, I mean, 0:16:14.680 --> 0:16:16.400 like he said that he was going to be the 0:16:16.440 --> 0:16:19.400 interim CEO of Twitter when he bought Twitter, right, and 0:16:19.440 --> 0:16:22.960 he's clearly like emotionally invested in Twitter in some weird way, 0:16:23.360 --> 0:16:26.920 and now he's clearly emotionally invested in trashing Twitter, and 0:16:26.960 --> 0:16:30.080 so yeah, making him run Twitter would be really bad. 0:16:30.280 --> 0:16:31.800 I mean, I don't know, maybe would be great, but 0:16:31.840 --> 0:16:34.840 it seems like it would be really bad for like Twitter, right, 0:16:34.880 --> 0:16:37.000 for Twitter as a platform and as a public utility, 0:16:37.200 --> 0:16:39.320 and certainly for the employees. And it seems like it 0:16:39.320 --> 0:16:41.360 would probably be bad for him like personally, right, Like 0:16:41.400 --> 0:16:43.640 he's a human being who would now be in charge 0:16:43.640 --> 0:16:45.720 of like running this company that he claims to not 0:16:45.760 --> 0:16:47.720 want to run it, Right, Your punishment for backing out 0:16:47.720 --> 0:16:51.400 of the deal is that now you have to run Twitter, yeah, right, 0:16:51.480 --> 0:16:54.720 which like is a terrible punishment, but um, so yes, 0:16:54.760 --> 0:16:56.600 I agree. It's it's weird and it's in some way 0:16:56.680 --> 0:16:59.240 unprecedented because like the precedents are about like sort of 0:16:59.240 --> 0:17:02.360 more like rash economic actors, and this is like a 0:17:02.440 --> 0:17:05.480 deal about like you know, an angry man buying a 0:17:05.520 --> 0:17:07.840 social media company. If I were in charge, like let's 0:17:07.840 --> 0:17:10.440 say if I were the Delaware judge, and I said, 0:17:11.359 --> 0:17:12.880 he has no excuse for getting out of the deal, 0:17:12.880 --> 0:17:14.439 which is what I think now, Like we'll see what 0:17:14.520 --> 0:17:16.320 his filing say, but like, as of right now, it 0:17:16.359 --> 0:17:17.720 looks like it looks to me like he has no 0:17:17.760 --> 0:17:20.000 excuse for getting out of the deal. If I were 0:17:20.000 --> 0:17:22.240 the Delaware chanceller, I would say, look, I would like 0:17:22.320 --> 0:17:24.359 call a conference and I'd say, look, I'm going to 0:17:24.440 --> 0:17:27.280 order a specific performance. Musk has no excuse for getting 0:17:27.320 --> 0:17:28.679 out of the deal, and I'm going to order him 0:17:28.680 --> 0:17:30.800 to close the deal and he doesn't want that, and 0:17:30.840 --> 0:17:32.800 Twitter doesn't want that, and frankly, I don't want that 0:17:32.840 --> 0:17:36.640 because I'm a Twitter user. So work something out, man, Like, 0:17:36.800 --> 0:17:40.800 the only good outcome here is a settlement where Musk 0:17:40.920 --> 0:17:44.840 gives Twitter enough money that they don't feel so bad 0:17:45.280 --> 0:17:48.639 about letting the deal go away, and where he doesn't 0:17:48.640 --> 0:17:50.240 have to pay the forty four billion dollars and run 0:17:50.240 --> 0:17:52.320 Twitter all day. Right, So if he pays them, you know, 0:17:52.400 --> 0:17:54.200 he writes them a big check and they all agree 0:17:54.240 --> 0:17:57.600 to forget about it, then that seems like the best 0:17:57.720 --> 0:18:00.119 of the bad outcomes here. And the only way he 0:18:00.200 --> 0:18:04.800 does that is if he knows that the alternative is 0:18:04.840 --> 0:18:07.000 like a certainty of him being forced to pay forty 0:18:07.000 --> 0:18:09.240 four billion dollars and by Twitter. Let me ask you 0:18:09.280 --> 0:18:12.560 a question, not about the text of the law, but 0:18:12.640 --> 0:18:15.520 the practice of the law. Okay, so I've read a 0:18:15.520 --> 0:18:18.600 lot of matt Levine columns. It looks like must arguments 0:18:18.600 --> 0:18:24.040 are very bad. Twitter filed this lawsuit yesterday, uh and 0:18:24.200 --> 0:18:27.320 everyone basically said, wow, this is they have a dead 0:18:27.400 --> 0:18:31.480 decides with this. Do Musk's lawyers enjoy this? Do they 0:18:31.560 --> 0:18:33.680 live for this? Is this fun for them that they're 0:18:33.680 --> 0:18:36.159 now tasked with? Like, well, how do we find an 0:18:36.280 --> 0:18:39.239 argument that will like maybe hold up and find some 0:18:39.600 --> 0:18:42.199 precedent that everyone had forgotten about that's in like some 0:18:42.320 --> 0:18:45.240 dusty old book or something like is this energizing for them? 0:18:45.240 --> 0:18:48.119 Would you? Would you find it enjoyable having been a 0:18:48.200 --> 0:18:52.160 lawyer yourself? Would you enjoy being um must legal team? 0:18:52.240 --> 0:18:54.520 Right now? I thought you were going to ask Matt 0:18:54.640 --> 0:18:57.680 like what would be his strategy if he rejoined? Maybe 0:18:57.760 --> 0:19:00.399 tell Lipton to like defend Twitter? But you've got the 0:19:00.520 --> 0:19:03.520 other way and you've asked him Like how sheems like 0:19:03.560 --> 0:19:06.280 defending Twitter is easy? Like everyone agrees the laws full 0:19:06.400 --> 0:19:08.600 on the side, Like it doesn't actually seem that, like 0:19:08.840 --> 0:19:11.040 the Twitter lawyers have a tough case to make. We'll 0:19:11.080 --> 0:19:13.280 see what happens. But it doesn't seem like this is 0:19:13.280 --> 0:19:16.720 a particularly everyone's saying. It's like there's kind of a 0:19:16.800 --> 0:19:19.320 kind of a tappen for a putch, So like would 0:19:19.320 --> 0:19:21.520 it be fun to be on the Musque defense team 0:19:21.520 --> 0:19:26.760 in this situation? So their best argument is that he 0:19:26.840 --> 0:19:29.320 has not given them that Twitter has not given him 0:19:29.320 --> 0:19:32.920 the information he's requested bots. Now, I think we all 0:19:32.960 --> 0:19:35.879 agree that the idea that there are so many bots 0:19:35.920 --> 0:19:38.199 that the Twitter that like Twitter is not a functioning business, 0:19:38.200 --> 0:19:40.320 is like insane and so that's not gonna work. But 0:19:40.760 --> 0:19:43.480 he's been asking for information about bots, and he says 0:19:43.560 --> 0:19:46.200